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on Central Banking |
| By: | Ahmed, Mhammad Ashfaq; Nawaz, Nasreen |
| Abstract: | Objective: Contemporary research on monetary policy does not account for the loss/gain in efficiency during the adjustment of the market and the after-policy vis-a-vis pre-policy equilibrium in the money market. After a central bank exercises a monetary policy, the central bank's cost as a supplier of money rises to pre-policy cost plus the per unit money cost incurred due to monetary policy, which affects money supply and pushes the money market out of equilibrium. Demand and supply of money along with the interest rate follow certain adjustment mechanism until the final equilibrium arrives. The basis of adjustment is lack of coordination regarding decisions of consumers and suppliers of money at the prevailing interest rate. For the design of an optimal monetary policy, efficiency considerations both during the adjustment of the market as well as in final equilibrium are important to be taken care of. This research designs a dynamic money market model and derives an optimal monetary policy. Methods: A perfectly competitive money market with five agents has been modeled. The equations maximizing their objectives have been derived and solved simultaneously to solve the model. An optimal monetary policy has been derived by minimizing the objective function of efficiency loss, i.e., supply or consumption of money lost in post-policy equilibrium vis-a-vis the pre-policy one, and the loss during the time market is adjusting subject to central bank's cost constraint. Results: Derived mathematical expressions outline the optimal expansionary and contractionary monetary policies considering the adjustments in demand and supply over time. Conclusion: The expressions are functions of demand, supply, and inventory curves' slopes as well as initial pre-policy equilibrium quantity of funds. (JEL E41, E42, E43, E51, E52, E58) |
| Keywords: | Money Market, Monetary Policy, Dynamic Efficiency, Interest Adjustment Path |
| JEL: | E41 E42 E43 E51 E52 E58 |
| Date: | 2024–04–28 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128663 |
| By: | Swayamshree Barik (Indian Institute of Technology Roorkee); Manish K. Singh (Indian Institute of Technology Roorkee); Harsh Vardhan (xKDR Forum) |
| Abstract: | Central banks aim to achieve price stability by adjusting interest rates to meet their inflation target. However, when a central bank also manages the government debt, tightening policy rates raises borrowing costs, thereby increasing the probability of debt distress. To understand the nature of this trade-off, we examine how policy rate changes by the Reserve Bank of India affect the Government of India's actual borrowing costs. Using monthly data from 2004 to 2025 and an ARDL error-correction framework, we estimate the differential impact of policy rate on both primary and secondary markets and find a clear divergence. In secondary markets, pass-through is gradual and declines with maturity, whereas in the primary markets, transmission is immediate and near-complete, and it remains durably anchored to the policy rate in the long run. We interpret this as a distinctive feature of India's institutional arrangement, where captive investors and the RBI's discretionary authority over auctions keep sovereign borrowing costs closely tied to monetary policy. |
| JEL: | E43 E52 E58 G12 H63 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:anf:wpaper:48 |
| By: | Jonathan Swarbrick (University of St Andrews) |
| Abstract: | This paper studies monetary policy in a New Keynesian economy with frictional bank lending, rationalising evidence that lending conditions can remain tight despite liquidity injections. The model features a policy trade-off in which increases in banking sector liquidity can incentivise more lending by lowering the overnight rate and the marginal cost of funds, but can also incentivise less lending by compressing bank margins as interest rates approach the policy floor, worsening adverse selection and credit rationing. As a result, quantitative easing can exert a contractionary effect when the economy is away from the effective lower bound, with outcomes depending on borrower risk and the size of the programme. However, both channels raise inflation expectations, and so liquidity policies are always expansionary at the lower bound. Optimal policy features a deflation bias under credit rationing, while commitment to future accommodation eases current credit conditions and implies gradualism in quantitative tightening. |
| Keywords: | Monetary policy; quantitative easing; small business lending; credit rationing; bank liquidity |
| JEL: | E5 E44 G21 |
| Date: | 2026–03–25 |
| URL: | https://d.repec.org/n?u=RePEc:san:econdp:2601 |
| By: | Pia Hüttl; Gökhan Ider; Matthias Kaldorf |
| Abstract: | Central bank collateral policy specifies which assets banks can pledge as collateral to obtain central bank funding and is an important determinant of liquidity in the banking system. We propose a high-frequency identification approach to study the systematic effects of central bank collateral policy on banks, financial markets, and asset prices. We identify collateral policy surprises using intraday bank stock price changes around Eurosystem collateral policy announcements. Expansionary collateral policy surprises lead to excess returns of bank stocks, a decline in common volatility measures, and a reduction in bank default risk, in particular for riskier banks. They also compress core-periphery government bond spreads, even for policy changes that are unrelated to the collateral treatment of government bonds. The uneven transmission of collateral policy through banks to sovereign bond markets is distinct from both central bank asset purchases and conventional monetary policy. |
| Keywords: | Central Bank Collateral Framework, Bank Stocks, Government Bond Market, High Frequency Identification, Intermediary Asset Pricing |
| JEL: | E44 E58 G12 G21 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2162 |
| By: | Cory Baird; Jonathan Benchimol; Wook Sohn; Vira Vyshnevska; Iegor Vyshnevskyi |
| Abstract: | This study introduces the Monetary Policy Statement Database (MPSD), comprising 6, 693 statements from 51 central banks worldwide (1990-2024). We develop a reproducible pipeline combining standard natural language preprocessing with large language model (LLM) tools for cross-country analysis. Four key findings emerge. First, statements lengthened substantially after the Global Financial Crisis while readability improved modestly. Second, inflation references comove across countries during global inflation episodes. Third, LLM-based question answering and aspect-based sentiment reveal that central banks attribute global financial conditions primarily to broad U.S. macroeconomic developments rather than to Federal Reserve policy actions specifically. Fourth, using a benchmark dictionary-based sentiment index and LLM-derived aspect-based sentiment indicators, Granger causality tests suggest that statement sentiment predicts the Global Financial Cycle rather than merely responding to it. The MPSD and accompanying codebase support reproducible research on monetary policy communication and international transmission. |
| Keywords: | central bank communication, large language models, text analysis, generative database, machine learning |
| JEL: | C55 C63 E52 E58 G15 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2026-25 |
| By: | Issing, Otmar |
| Abstract: | Under the overwhelming evidence of numerous empirical studies that found a negative correlation between the degree of independence and the level of inflation, many governments granted their national central banks independent status around 1990. With low inflation rates in the subsequent period - with the notable exception of the sharp price increases after 2020 - monetary policy largely confirmed the empirical findings. Consequently, one might expect that independence is now considered an undisputed element of sound central bank governance. However, this is by no means the case. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:imfswp:340021 |
| By: | Timmer, Yannick; Van der Ghote, Alejandro; Perez-Orive, Ander |
| Abstract: | We revisit the credit channel of monetary policy when firms face multiple financing constraints, a common feature of corporate financing we document empirically. Our theory shows that the multiplicity of constraints dampens the transmission of expansionary policy to firm borrowing and investment notably but amplifies the transmission of policy tightening. This asymmetry arises because, when policy tightens (eases), the most (least) responsive constraint binds. Using U.S. firm-level data and exploiting a quasi-natural experiment, we find strong support for these predictions and for our proposed channel. Embedding the mechanism into a New Keynesian framework, we find that the drop in investment after contractionary shocks is twice as large as its increase following equally-sized expansionary shocks, thus providing an explanation for why monetary policy tightenings have stronger effects than easings, a longstanding puzzle in monetary economics. Moreover, our analysis implies that the effectiveness of monetary policy is strongly determined by the distribution of financial constraints across firms and that similar asymmetries likely characterize the transmission of other macroeconomic shocks. JEL Classification: D22, D25, E22, E44, E52 |
| Keywords: | asymmetry, financial frictions, firm heterogeneity, investment, monetary policy |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20263217 |
| By: | Maxime L. D. Nicolas; Fran\c{c}ois Sicard; Marion Laboure; Zixin Sun; Anah\'i Rodr\'iguez-Mart\'inez |
| Abstract: | This study investigates the transmission of monetary policy narratives to Bitcoin prices, distinguishing the impact of ex-ante expectations from ex-post interest rate implementation. We introduce a high-frequency Monetary Policy Expectations (MPE) index, using a Large Language Model (LLM)-based classification of 118, 000+ market messages to achieve a precise hawkish/dovish decomposition. Results from a framework combining Long Short-Term Memory (LSTM) networks with SHapley Additive exPlanations (SHAP) indicate that Bitcoin functions as a sensitive barometer of central bank signaling; specifically, hawkish narratives consistently trigger negative price responses independently of actual Federal Funds Rate adjustments. We demonstrate that the MPE index Granger-causes Bitcoin returns at short-to-medium horizons, establishing linear predictive causality, while the LSTM-SHAP framework reveals pronounced non-linear, macroeconomic regime-dependent interactions. These findings highlight Bitcoin's structural sensitivity to global monetary discourse, establishing LLM-derived sentiment as a potent leading macroeconomic indicator for the digital asset landscape. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.08825 |
| By: | Fecht, Falko; Kellers, Moritz |
| Abstract: | We study how monetary policy is transmitted through the open-end investment fund (OEIF) sector and how this transmission depends on fund fragility. Using high-frequency identified ECB monetary policy surprises and daily share-class data on German-domiciled OEIFs from 2010 to 2023, we show that an unexpected 10 basis point monetary tightening reduces cumulative fund net inflows by more than 0.2 percentage points within two weeks (about 0.7 standard deviations of monthly sector flows). This effect is highly uneven: fragile funds-identified by an excessive flow response to past under-performance-experience an additional outflow of about 0.2 percentage points compared to their peers, implying a total response roughly three times as large as for non-fragile funds. Intuitively, the pattern is present only for unexpected tightening, not easing. Fragile bond funds reduce corporate bond holdings more strongly, and fragile funds meet redemptions by running down bank deposits. While the average fund increases deposits after tightening, fragile funds reduce deposits and shrink liquidity buffers amplifying the deposit channel. At the bank level, investor reallocations into overnight deposits induce a reallocation of deposits across banks. Overall, fund fragility emerges as a key state variable for monetary policy transmission and financial stability. |
| Keywords: | monetary policy, investment funds, financial fragility |
| JEL: | E52 G1 G23 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bubdps:339998 |
| By: | Donato Masciandaro |
| Abstract: | A key tool has characterized monetary policy analysis over the past thirty years: the use of reaction functions. This paper aims to review the evolution of the economics of the monetary policy reaction function from Taylor’s (1993) seminal contribution to present day. The review is based on two assumptions: (1) the peculiar property of the Taylor rule as a flexible tool explains its pathbreaking nature given its capacity to test multiple economic and institutional cases; and (2) this property can be described using a theoretical four-pillar approach. In this approach, the reaction function is the fourth pillar, which represents the final outcome of three intertwined drivers – business-cycle dynamics, central bank governance and central bankers’ preferences – and is itself a feedback instrument rule. Then, given the macroeconomic conditions and the infrequent changes of the monetary regime, it is highlighted the role that the central bankers’ preferences has played at various points, describing how, after the founding conservative central banker was born, new members of the Taylor rule family progressively emerged: visionary, prudent, holistic and creative central bankers, respectively with their forward-looking, inertial, augmented, and shadow reaction functions. Finally the literature stresses that so far the true central bankers show a mixed attitude to adopt the flexible instrument rule perspective, particularly when they are confronted with the Odysseus versus Delphi dilemma. |
| Keywords: | monetary policy, Taylor rule, reaction function, central bank independence, central banker conservatism, hawks versus doves, Odysseus versus Delphi |
| JEL: | E52 E58 E61 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:baf:cbafwp:cbafwp26270 |
| By: | Ding, Qiushuo; Luo, Yulei; Wang, Gaowang |
| Abstract: | We develop a model of optimal monetary policy in an economy where firms' price-setting decisions are distorted by a signal-extraction problem: they cannot perfectly distinguish aggregate from idiosyncratic shocks based on noisy local information. This systematic misattribution of aggregate nominal disturbances to firm-specific factors generates an additional indirect price response, implying that strict price stability is no longer optimal. Instead, the optimal policy fully stabilizes the output gap, which necessarily requires accommodating fluctuations in the price level. The cyclicality of the optimal price level depends critically on the source of firms' incomplete information: learning from local demand signals implies a procyclical price level, whereas learning from local productivity signals yields a countercyclical one. We show that these results are robust to extensions featuring elastic attention and sentiment shocks. |
| Keywords: | Optimal monetary policy, Idiosyncratic shock, Confounding information, Price stability |
| JEL: | D8 E5 |
| Date: | 2026–02–23 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128146 |
| By: | Murat Duran; Mustafa Erdem; Ismail Anil Talasli |
| Abstract: | [EN]In this study, two proxy indicators are constructed to reflect the monetary stance of the Central Bank of the Republic of Türkiye (CBRT), using market-based data. These indicators also consider the effects of macroprudential regulations and unconventional tools that influence the transmission of policy rates into market interest rates. The study uses a dataset of 24 financial indicators comprising bond returns, money market and deposit rates, interest rate spreads and data related to the loan market. With the help of these indicators, the factors that summarize the monetary and financial conditions are obtained. These factors are mapped to the Weighted Average Funding Cost (WAFC), which reflects the cost of liquidity provided by the CBRT. As a result, two alternative indicators that reflect the monetary policy stance are developed. The first indicator utilizes all the dataset and presents a broader perspective by incorporating market expectations. The second indicator relies only on short-term variables. Therefore, it mostly reflects the current monetary policy and market conditions. Both indicators are more aligned with the WAFC between the forecast period of 2005- 2017. However, in the following years, some divergences were observed between these indicators and the WAFC. These divergences provide valuable information for understanding the effects of market expectations, regulatory measures and changing financial conditions on monetary policy. This method provides a powerful and flexible tool for analyzing the real impact of monetary policy during periods when the headline policy rate is insufficient to reflect the monetary stance. [TR] Bu calismada, Turkiye Cumhuriyet Merkez Bankasi’nin para politikasinin durusunu yansitmak uzere piyasa verileri kullanilarak iki faiz gostergesi (proxy) olusturulmustur. Bu gostergeler, politika faizinin piyasa faizlerine aktarimini etkileyen makro ihtiyati duzenlemeler ve geleneksel olmayan araclarin etkisini de dikkate almaktadir. Calismada, tahvil getirileri, para piyasasi ve mevduat faizleri, faiz farklari ve kredi piyasasina iliskin verilerden olusan 24 finansal gosterge kullanilmistir. Bu gostergeler yardimiyla, parasal ve finansal kosullari ozetleyen faktorler elde edilmistir. Bu faktorler, TCMB'nin sagladigi likiditenin ortalama maliyetini yansitan Agirlikli Ortalama Fonlama Maliyeti (AOFM) ile iliskilendirilmistir. Boylece, para politikasi durusunu yansitan alternatif iki gosterge gelistirilmistir. Gostergelerden ilki, tum verileri kullanmakta ve piyasa beklentilerini kapsayan daha genis bir bakis acisi sunmaktadir. Ikinci gosterge ise sadece kisa vadeli verilere dayanmaktadir. Bu nedenle, mevcut para politikasi uygulamalarini ve piyasa kosullarini yansitmaktadir. Her iki gosterge de tahmin donemi olan 2005–2017 yillari arasinda AOFM ile daha yuksek uyum gostermektedir. Ancak sonraki yillarda bu gostergeler ile AOFM arasinda bazi ayrismalar gozlenmektedir. Bu ayrismalar, piyasa beklentilerinin, duzenleyici tedbirlerin ve degisen finansal kosullarin para politikasina olan etkilerini anlamak acisindan degerli bilgiler sunmaktadir. Bu yontem, manset politika faizinin parasal durusu yansitmakta yetersiz kaldigi donemlerde para politikasinin gercek etkisini analiz etmek icin guclu ve esnek bir arac saglamaktadir. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:tcb:econot:2602 |
| By: | Kenta Kinehara (Bank of Japan); Tatsuyoshi Okimoto (Bank of Japan and Keio University); Hiroki Yamamoto (Bank of Japan) |
| Abstract: | This paper investigates the reasons behind the resilience of the U.S. economy despite the rapid and significant monetary policy tightening since 2022, focusing on two perspectives: heterogeneity among GDP demand components, and the time-varying nature of the credit channel. Methodologically, we employ a Factor-Augmented VAR model to examine the heterogeneity in the effects of monetary policy across demand components. Subsequently, we estimate a smooth-transition Local Projection model with the excess bond premium as a transition variable to quantify the time-varying effects of monetary policy depending on financial market conditions. The analysis reveals that demand components with higher reliance on borrowing are dampened by rate hikes, while components with lower reliance exhibit muted responses. Furthermore, the results show that the effects of monetary policy intensify for demand components with higher borrowing dependence only when the credit channel is strongly operative. Conversely, components with lower borrowing dependence demonstrate weak reactions irrespective of the prevailing regime. These findings suggest that the limited downward impact of the monetary policy tightening since 2022 on the real economy can be explained by the heterogeneity in responses among demand components, the "composition effect" linked to the growing recent dominance of service consumption in the U.S. economy, and the "regime effect" characterized by the subdued amplification role of the credit channel during this period. This paper contributes to the literature by providing a unified framework to analyze both composition and regime effects. |
| Keywords: | Monetary Policy; Credit Channel; FAVAR; Smooth-transition Local Projection |
| JEL: | E21 E22 E44 E52 |
| Date: | 2026–04–16 |
| URL: | https://d.repec.org/n?u=RePEc:boj:bojwps:wp26e06 |
| By: | Luisa Corrado; Stefano Grassi; Aldo Paolillo; Francesco Ravazzolo |
| Keywords: | Fossil energy, supply shocks, inflation, complementarities, monetary policy, fiscal policy |
| JEL: | E31 E32 E52 E62 Q43 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:enp:wpaper:eprg2606 |
| By: | Itamar Drechsler; Alexi Savov; Philipp Schnabl |
| Abstract: | We argue that severe credit crunches in the banking system contributed to the Great Stagflation of the 1970s. The credit crunches were due to Regulation Q, a banking law that capped deposit rates. Under Reg Q, Fed tightening triggered large deposit outflows that led banks to contract lending. The credit crunches line up closely with stagflation in the time series. To explain this, we add Reg Q to a standard model where firms use bank loans to finance working capital. When Reg Q binds and credit contracts, working capital becomes more expensive, leading firms to raise prices and shrink output. The model implies an augmented Phillips curve where monetary tightening reduces aggregate supply in addition to demand. The impact on supply is increasing in the severity of the credit crunches, firms' external finance dependence, and their working capital intensity. We test all three predictions in the cross section of manufacturing industries. In each case, we find that more exposed industries raise prices and cut output relative to others. Our results imply that under severe financial frictions monetary policy affects aggregate supply and not just demand. |
| JEL: | E52 E58 G21 G28 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35057 |
| By: | Oscar Iván Ávila-Montealegre; Juan J. OspinaTejeiro; Anderson Grajales-Olarte; Mario A. Ramos-Veloza |
| Abstract: | We analyze how the minimum wage affects a typical emerging economy with high labor informality. Using an extended New Keynesian small open economy model, we find that an unexpected increase in the minimum wage disproportionately affects low-skilled workers, with limited effects on inflation and the monetary policy rate. A higher minimum wage raises production costs and induces the substitution of formal workers with informal labor and machinery, leading to lower output, employment, and net exports. We also find that the existence of a minimum wage alters the transmission of productivity, demand, and monetary shocks, resulting in a more persistent impact on macroeconomic variables and lower effectiveness of monetary policy in controlling inflation. While the minimum wage mitigates consumption inequality in the short run, it increases employment volatility. The macroeconomic implications of minimum wages are significant, and the mechanisms differ from those highlighted in the literature for advanced economies. |
| Keywords: | DSGE model, minimum wage, informal labor markets, monetary policy, heterogeneous agents |
| JEL: | E13 E50 J31 J46 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:rbp:wpaper:2025-018 |
| By: | Patrik Kupkovic (National Bank of Slovakia) |
| Abstract: | The global financial and sovereign debt crises prompted policymakers to prioritise systemic risk and financial stability. Since then, the use of borrower-based measures in macroprudential policy has become central to managing credit booms and housing market imbalances. However, evidence on the formal and rule-based implementation of this policy remains limited, particularly in small open economies that are prone to financial imbalances. Using a vector error correction model (VECM), this paper estimates Slovakia’s long-run macroprudential rule and its short-run asymmetric adjustment. The results indicate a transition from a passive, procyclical stance to an active, countercyclical framework between 2009 and 2014. In the short run, most of the tightening occurs when conditions are excessively loose, consistent with a strong initial move towards a tighter borrower-based framework. These findings contribute to the empirical evidence on both the long-run macroprudential rule and the asymmetric short-run responses that influence policy transmission. |
| JEL: | C32 C51 E61 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:svk:wpaper:1140 |
| By: | Thomas Drechsel; Ko Miura |
| Abstract: | Bank regulation supports financial stability, but might constrain economic activity. This paper estimates the macroeconomic effects of bank regulation using a high-frequency identification approach. We measure market surprises in a bank stock price index during a narrow time window around Federal Reserve speeches that discuss the US banking system and its regulation. We then develop a sign restriction procedure to elicit the variation in these market surprises that can be interpreted as news about bank regulation. News that bank regulation will be tighter than expected mitigates risk in the banking sector, but reduces economic activity by increasing banks' funding costs and tightening loan supply. A 10 basis point regulation-induced peak reduction in bank risk premiums is accompanied by a 15 basis point peak increase in the unemployment rate. Compared to previous studies, these magnitudes suggest a relatively high macroeconomic cost of tightening bank regulation, at least in the short run. |
| JEL: | E44 E51 E52 E58 G28 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35071 |
| By: | Jorge Pozo (Banco Central de Reserva del Perú); Youel Rojas (Banco Central de Reserva del Perú) |
| Abstract: | This paper investigates how physical risks disrupt business cycles and hinder the role of monetary policy in stabilizing the economy. We look for evidence to determine whether the effects of natural disasters resemble demand-side shocks or supply-side shocks. We utilize data on natural disasters at both the country-quarter and country-year levels from various sources to ensure the robustness of our analysis. We find evidence that natural disasters act as supplyside shocks, exerting inflationary pressures while simultaneously contracting GDP growth and the output gap, which are persistent. This feature of natural disasters implies that monetary policy strategy becomes more challenging and uncertain following the occurrence of these events. However, these results are heterogeneous cross types of disasters, groups of countries, and the severity of the disaster. In low-income countries, the effects of natural disasters are more severe. In high-income countries the non-linear effects become more important. |
| Keywords: | Natural disasters, supply shocks, monetary policy trade-off, inflation, GDP growth, output gap. |
| JEL: | E32 E52 Q5 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:rbp:wpaper:2025-012 |
| By: | Imbierowicz, Björn; Loeffler, Axel; Ongena, Steven; Vogel, Ursula |
| Abstract: | We examine how foreign macroprudential tightening transmits through multinational firms' internal capital markets. Using subsidiary exposure to countercyclical capital buffer (CCyB) increases, we find that while bank credit to subsidiaries falls 10 percent, parents fully substitute this via internal debt. Parents refinance this internal support by increasing borrowing from domestic banks and nonbanks, meeting the substitution needs of their subsidiaries. As a result, foreign CCyB tightening increases the exposure and risk borne by the parent's home jurisdiction. These findings reveal an unintended spillover: tightening in one country raises credit exposure and thereby borrower risk borne by lenders elsewhere through proactive internal financial redistributions within multinational corporations. |
| Keywords: | multinational corporation, internal capital market, countercyclical capital buffer, banks, nonbanks |
| JEL: | F23 F34 F36 G21 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bubdps:340012 |
| By: | Төлепберген Әлішер // Tolepbergen Alisher (National Bank of Kazakhstan) |
| Abstract: | Индекс потребительских цен (ИПЦ) является мерой инфляции, используемой директивными органами и участниками рынка в Казахстане. Однако ряд ИПЦ слишком волатилен, чтобы обеспечить надёжную оценку тренда инфляции, которая необходима директивным органам и участникам рынка для принятия решений. Кроме того, годовые показатели инфляции являются запаздывающими индикаторами по отношению к месячной инфляции и, следовательно, упускают поворотные моменты. Таким образом, директивные органы используют показатель «базовой» инфляции, который исключает из ИПЦ волатильные компоненты, такие как цены на фрукты, овощи и энергоносители. Однако это не решает проблему поворотных моментов. В данной работе разрабатывается новый индикатор базовой инфляции для Казахстана с использованием перекрёстных и динамических связей между ценовыми и неценовыми переменными в большой панельной выборке данных. Мы оцениваем два индикатора базовой инфляции для Казахстана, которые обладают некоторыми привлекательными статистическими свойствами в отличие от традиционных метрик базовой инфляции. // The Consumer Price Index (CPI) is the measure of inflation followed by policymakers and market participants in Kazakhstan. However, due to its volatility, the CPI series is not a reliable measure of the underlying trend in inflation. This makes it difficult for policymakers to make informed decisions about monetary policy. In addition, the annual inflation measures that are used policymakers are lagging indicators and hence miss turning points in the inflation rate. Thus, policymakers employ the measure of "core" inflation that excludes certain volatile components, such as fruits and vegetables from the CPI calculation. However, this measure has limitations when it comes to capturing turning points. This paper proposes a new approach to estimating core inflation index for Kazakhstan by utilizing cross-sectional and dynamic links between prices and non-price variables in a large dataset. We estimate two indicators of core inflation for Kazakhstan that have some attractive statistical properties in contrast to traditional measures of core inflation. |
| Keywords: | базовая инфляция, динамическая факторная модель, денежно-кредитная политика, прогноз инфляции, core inflation, Dynamic Factor Model, monetary policy, inflation forecast |
| JEL: | C32 E31 E37 E52 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:aob:wpaper:74 |
| By: | Chlo Allison; Theuns de Wet |
| Abstract: | This paper examines how inflation targeting influences the inflation risk premium embedded in South Africas nominal government bond yields. |
| Date: | 2026–04–01 |
| URL: | https://d.repec.org/n?u=RePEc:rbz:wpaper:11102 |
| By: | Bindseil, Ulrich |
| Abstract: | The retail payment industry is significant, affects every citizen and is a very precondition for a modern society based on the division of labor. It is characterized by two-sidedness, strong network effects, high fixed costs, high concentration and high profitability of successful firms, layering, path dependencies and stability of inferior equilibria. Alternative retail payment architectures may have potentially relatively similar social welfare performances, but vastly different implications on different industry stakeholders. The specificities of the retail payment industry accentuate the incentives to influence public opinion and lawmakers, including through "alternative" narratives. The public discourse on retail payment architecture will be confusing for several reasons: (i) technical complexity of retail payment architectures for non-experts; (ii) expertise concentrated with those having vested interests and who will thus always provide biased explanations and opinion; (iii) significant financial fire power of successful incumbent firms to promote their narratives; (iv) incentives to promote projects "out of the money" with exaggerated arguments, while truly promising projects may be kept secret for long; (v) long deployment times and uncertainty on ultimate implementation and use. We discuss the various perspectives of key retail payment industry stakeholders. For each, we identify their main interest, key preferred and feared narratives. We discuss in more depth specific issues relating to the current discourse around retail CBDC. We draw lessons from a public policy perspective. |
| Keywords: | Monetary architecture, means of payment, network industries, public discourse, vested interests, central bank money |
| JEL: | E42 E58 G21 G23 G28 L11 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safewp:339999 |